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Attorney Trust Accounts and Rule 1.15https://ylsgavel.wordpress.com/2014/11/05/attorney-trust-accounts-and-rule-1-15/
https://ylsgavel.wordpress.com/2014/11/05/attorney-trust-accounts-and-rule-1-15/#commentsWed, 05 Nov 2014 18:57:25 +0000http://ylsgavel.wordpress.com/?p=248]]>Most people know that that stealing money is wrong – both morally and legally. And likewise, attorneys know (or should know) that when acting as a fiduciary, misappropriation – the unauthorized use of funds that belong to a client or third party – is a huge no-no and a disbarrable offense. However, even with this knowledge, attorneys are often disciplined for Rule 1.15 Safekeeping of Property violations. 1

Unfortunately, trust account management is not a subject that is taught in law school. Therefore, many attorneys are learning about their fiduciary responsibilities through on-the-job training. This training may include instances of issues that may rear its ugly head in a few forms:

Reckless Behavior
Reckless or intentional misappropriation is more obvious. Some attorneys believe that “borrowing” entrusted funds – even for a short period of time – is appropriate. Or, in some instances, attorneys believe that if they have sufficient funds in their operating account or, if they have overdraft protection, that this behavior is acceptable. Simply put, it is not. This is the essence of misappropriation and is considered an act of “moral turpitude” by most disciplinary courts. It is a clear violation of Rule 1.15(a).

Overdrawn Accounts
Attorneys are experiencing overdrafts on their trust account and Maryland Business and Occupations and Professions Article Rules 16-605 and 16-610(b)(1)(B) requires financial institutions to notify Bar Counsel’s office of an overdraft of any attorney trust account. When this occurs, Bar Counsel, by statute, is authorized and required to investigate the circumstances surrounding the overdraft. Of special note is that the Maryland Business and Occupations and Professions Article Rule 16-606.1, enacted January 1, 2008, requires – among other things – attorneys to perform a monthly reconciliation of their attorney trust account and sets forth the types of records that an attorney should keep.

Negligence
Intentional or negligent misappropriation occurs when attorneys are not paying attention to their trust account and for a number of reasons, entrusted funds are invaded. Examples include:

Not having enough money in the attorney trust account to account for credit card fees or banking fees;

Relying on checks provided by clients that have “insufficient funds” and failing to reconcile the attorney trust account prior to writing checks against those funds;

Falling victim to internet scams;

Trusting employee(s) that misuse entrusted funds.

These instances can all be avoided with clear banking practices and proper oversight by the responsible attorney. Some attorneys will claim that they do not have the accounting or bookkeeping skills to manage their accounts and that is why these instances of negligent acts occur. Unfortunately, this rationale will not protect the responding attorney from disciplinary action. The Article 5 Rules set forth that an attorney is responsible for the acts of employees or agents of the lawyer. See Rule 5.3 (Responsibilities Regarding Nonlawyer Assistants). If however, an attorney feels that they cannot properly manage their trust account they should seek the assistance of a professional bookkeeper, certified public account, or office manager to assist with these accounting tasks. And even then, the attorney is still responsible for the oversight and management of the account.

Bad Record Keeping
In addition to the negligent acts described above, attorneys also find themselves violating Rule 1.15(a), which requires attorneys to maintain records of all receipts and disbursements from their attorney trust account for at least five (5) years after the transaction was made. Again, this is a rather simple requirement and violations can be avoided with a review of the relevant rules, clear banking practices, and attorney oversight.

Advanced Fees v. Flat FeesAttorneys historically have misunderstood or misused flat fees in practice. Rule 1.15(c) requires attorneys to maintain unearned fees in an attorney trust account unless the client gives “informed consent, confirmed in writing” to an arrangement that allows the attorney to deposit funds into an operating account. Without this language, which should ideally be in the fee agreement, an attorney may be inadvertently misappropriating unearned fees while believing that they were entitled to the funds because it was characterized as a “flat fee” rather than an advanced fee.

Honest Mistakes
Things happen. But even the most diligent attorney who is familiar with the rules on attorney trust accounts can run afoul of the rules. Some common honest mistakes include:

Depositing funds into the wrong account;

Keeping earned funds in trust too long; and

Not titling account properly as required by Maryland Business and Occupations and Professions Article Rule 16-606.2

While this list is certainly not exhaustive, hopefully it will give you an idea of some of the mistakes that can occur. However, if an attorney has been diligent with their attorney trust account management responsibilities, these mistakes should be simple to correct to bring the attorney back into the land of compliance.

Dolores Dorsainvil is a Senior Staff Attorney at the D.C. Office of Bar Counsel where she investigates, and where necessary, prosecutes cases of ethical misconduct against District of Columbia lawyers. You may read more about Ms. Dorsainvil by visiting her website at www.doloresdorsainvil.com.

1 Rule 1.15 states, “(a) A lawyer shall hold property of clients or third persons that is in a lawyer’s possession in connection with a representation separate from the lawyer’s own property. Funds shall be kept in a separate account maintained pursuant to Title 16, Chapter 600 of the Maryland Rules, and records shall be created and maintained in accordance with the Rules in that Chapter. Other property shall be identified specifically as such and appropriately safeguarded, and records of its receipt and distribution shall be created and maintained. Complete records of the account funds and of other property shall be kept by the lawyer and shall be preserved for a period of at least five years after the date the record was created.

(b) A lawyer may deposit the lawyer’s own funds in a client trust account only as permitted by Rule 16-607 b.

(c) Unless the client gives informed consent, confirmed in writing, to a different arrangement, a lawyer shall deposit legal fees and expenses that have been paid in advance into a client trust account and may withdraw those funds for the lawyer’s own benefit only as fees are earned or expenses incurred.

(d) Upon receiving funds or other property in which a client or third person has an interest, a lawyer shall promptly notify the client or third person. Except as stated in this Rule or otherwise permitted by law or by agreement with the client, a lawyer shall deliver promptly to the client or third person any funds or other property that the client or third person is entitled to receive and, upon request by the client or third person, shall render promptly a full accounting regarding such property.

(e) When a lawyer in the course of representing a client is in possession of property in which two or more persons (one of whom may be the lawyer) claim interests, the property shall be kept separate by the lawyer until the dispute is resolved. The lawyer shall distribute promptly all portions of the property as to which the interests are not in dispute.”

2 An attorney or law firm shall maintain each attorney trust account with a title that includes the name of the attorney or law firm and that clearly designates the account as “Attorney Trust Account”, “Attorney Escrow Account”, or “Clients’ Funds Account” on all checks and deposit slips. The title shall distinguish the account from any other fiduciary account that the attorney or law firm may maintain and from any personal or business account of the attorney or law firm.

]]>https://ylsgavel.wordpress.com/2014/11/05/attorney-trust-accounts-and-rule-1-15/feed/0ddorsainvilThe Challenges of Lawyer Regulationhttps://ylsgavel.wordpress.com/2014/05/12/the-challenges-of-lawyer-regulation/
https://ylsgavel.wordpress.com/2014/05/12/the-challenges-of-lawyer-regulation/#commentsMon, 12 May 2014 13:39:05 +0000http://ylsgavel.wordpress.com/?p=241]]>The legal profession and its regulators are facing new issues and challenges more so now than ever before. It seems like every time we turn around, there is a flurry of e-mails, articles, conferences, seminars, courses, and ethics opinions surrounding these new issues, new questions, and new challenges.

These “challenges” arise from a number of factors – things like technology, globalization, and the economic crisis are driving forces in how it is that lawyers are providing legal services to their clients. The practice of law has changed. It is certainly not what it used to be. There was a time when a lawyer could practice in their own shop in their corner of the world, and a lawyer in another jurisdiction would never come to know it. Now we have what we call the spillover effect, where a regulatory development in one jurisdiction can have effects and consequences in one’s home jurisdiction.

But the reality is that the legal profession is steeped in tradition. And the profession, as a whole, has a desire to maintain its core values. As a result, regulation proves difficult and is slow to address these challenges. Lawyer regulation is not keeping up with the pace of life’s changes.

As a result, the ABA’s Ethics 20/20 Commission, created in 2009, was charged with reviewing the ABA Model Rules of Professional Conduct and examining the evolution of the practice of law and the lawyer regulation system. The Rules of Professional Conduct, at the time they were adopted, did not contemplate the legal marketplace today. After years of study, Ethics 20/20 recommended changes – although not revolutionary, they have offered much-needed guidance on a wide range of ethics issues that have been arising with greater frequency due to globalization and rapid changes in technology. Below is a highlight of some of these changes:

Technology -Competency
The new Rule 1.1 does not impose any new obligations on lawyers but it does shine the spotlight on a lawyer’s need to remain aware of technology, including the benefits and risks associated with it, as part of a lawyer’s general ethical duty to remain competent.

We no longer live in a society where lawyers can solely rely on secretaries and support staff to handle technological concerns. Lawyers need to be technologically proficient so that they are able to properly advise clients as necessary. This may mean stepping out of a comfort zone but it is absolutely necessary in this day and age.

Technology – Confidentiality
The internet has become a major part of the practice of law. Lawyers are enlightened about the possibilities that technology offers. Here are just a few ways that lawyers are using technology:

Most attorneys have remote access to their office and their client files;

Lawyers rely on smart phones and mobile devices to share data about their clients’ matter; and

Some lawyers are using cloud based computing to store their client’s information.

Questions about ethical obligations as it relates to data privacy and security are new areas for lawyers. To address this, the new Rule 1.6 added language which states that lawyers must make “[r]easonable efforts to prevent inadvertent disclosures.” While this duty has existed under the prior rules, the modifications make clear that this affirmative duty extends to data privacy, security and reliability. Additionally, the Comments to Rule 1.6 offer further guidance on what factors are considered when determining whether an attorney has made “reasonable efforts” in securing client’s information.

Communication
Historically, when communicating with clients, lawyers would either set up a meeting, have a phone call or write a letter and send it by snail mail. Now, lawyers are using other forms of technology to better communicate with clients, i.e., e-mails, text messaging, and social media.

Lawyer mobility
Historically, lawyers typically spent their entire career with the same firm that they joined right out of law school. However, with the economic crisis and its effect on the legal market, lawyers today are changing employers several times and are looking to for ways to form new partnerships and associations. They need the ability to disclose limited information to lawyers in other firms to detect conflicts of interest. The amendment to Rule 1.6 now provides more protection to client’s confidences and gives the lawyers the ability to make lateral moves be more mobile.

Life is moving at an exponential pace. And while the ABA has made great strides to edit the Rules of Professional Conduct and make them more practical for today’s practitioner, I would encourage you all to think about the further improvements that you can recommend to address what is now becoming common practice. Embrace change. Talk to your bar association officers and regulation counsel so that these new “issues” do not ripen into misconduct.

]]>https://ylsgavel.wordpress.com/2014/05/12/the-challenges-of-lawyer-regulation/feed/0ddorsainvilIs Attorney Blogging a First Amendment Issue?https://ylsgavel.wordpress.com/2014/03/12/is-attorney-blogging-a-first-amendment-issue/
https://ylsgavel.wordpress.com/2014/03/12/is-attorney-blogging-a-first-amendment-issue/#commentsWed, 12 Mar 2014 17:09:25 +0000http://ylsgavel.wordpress.com/?p=237]]>With so many social media platforms, more and more lawyers are finding avenues to use these platforms in their business models.[1] The Virginia courts, in the case of Hunter v. Virginia State Bar,[2] were presented with the constitutional issue of whether it was an attorney’s first amendment right to publish successful case results in a blog post on his law firm’s website, even without the disclaimer required by the Virginia State Bar Rules of Professional Conduct.[3] The court had to consider whether the attorney’s blog website was commercial speech and whether an attorney can discuss publicly available information related to a client matter without the client’s consent. In his blog titled “This Week in Richmond Criminal Defense,” the majority of Mr. Hunter’s blog posts discussed favorable outcomes[4] received in his clients’ matters, without any disclaimers that puts case results in a context that is not misleading and explains that there are no guarantees and that each case’s outcomes depends on a number of factors. See Virginia State Bar Rule of Professional Conduct 7.1(b). The Virginia State Bar initiated an investigation and concluded that Mr. Hunter violated the rules pertaining to lawyer advertisement, specifically, Virginia Rules of Professional Conduct 7.1, 7.2,[5] because they deemed that his advertisements were misleading and did not provide the necessary disclaimers. The Virginia State Bar also concluded that as a result of discussing client matters and revealing information that was either embarrassing or detrimental to the client without the client’s consent was a violation of Virginia Rule of Professional Conduct Rule 1.6.[6] In his defense, Mr. Hunter stated that the blog was not a legal advertisement but rather was political speech concerning the judicial system and that it was important to use the real names of his clients so as to provide his audience with an accurate description of what transpired in the legal matter. Mr. Hunter defended against the Virginia Rule of Professional Conduct 1.6 charge and stated that the information that he posted was public information that had already been disseminated. The Virginia State Bar imposed a public admonition with terms including a requirement that Hunter remove “case specific” content from his blog and post a disclaimer as required under Virginia Rule of Professional Conduct 7.1(b). Hunter appealed to the Circuit Court for the City of Richmond and they affirmed the Third District Committee’s finding that under Virginia Rule of Professional Conduct 7.2(b), Hunter was required to post disclaimers when publishing case results. It, however, reversed the District Committee’s finding that he violated Virginia Rule of Professional Conduct 1.6 by posting embarrassing and detrimental information about his clients without their consent. The Circuit Court held that the application of Virginia Rule of Professional Conduct 1.6 violated Hunter’s First Amendment right to free speech. The matter then went to the Supreme Court of Virginia and, in a 5-2 decision, the court affirmed the Public Admonition with terms imposed on Hunter for failing to publish the required disclaimers and rejected Hunter’s first amendment argument and held that his blog post was commercial speech. The Court did not make a finding of a violation of Virginia Rule of Professional Conduct 1.6.[7] After having filed a petition for a writ of certiorari to the U.S. Supreme Court that was ultimately denied, Mr. Hunter entered into a consent order with the bar reinstating the public admonition with terms.

Social media is a great marketing tool that, if used ethically, has many rewarding benefits. Lawyers however, must be mindful of the pitfalls associated with social media that could result in the violation of the ethical Rules. In Maryland, the rules governing lawyer advertising are straight forward. Maryland Rule 7.1 dictates lawyers must only make truthful statements that are not misleading in their advertisements and that these statements cannot create an unjustified expectation about the results that the lawyer can achieve for a prospective client.[8] For example, a statement such as “I’ve won every jury trial I’ve ever had” may be technically true but in order for a prospective client to appreciate a lawyer’s skill-set it would be important to know that the lawyer has only had 3 jury trials. Similarly, it is a violation of Maryland Rule of Professional Conduct 7.5[9] to create a Facebook page where you state your firm name, “Dorsainvil & Associates” if in fact you are a solo practitioner and do not have any associates within your firm.

Although the Hunter case didn’t make a finding of a 1.6 violation, an attorney in Maryland must be mindful that, when making posts to various social media platforms, they may expose confidential or proprietary information in violation of Maryland Rule of Professional Conduct 1.6.[10] This is especially common when a lawyer posts specific information about a recent success in a matter such as a favorable verdict, or when a lawyer shares an anecdote about their challenges either in court, with opposing counsel, or with a difficult client. These types of posts are unauthorized disclosures that violate a lawyer’s duty to keep a client’s matter confidential as required under Rule 1.6 which states that a lawyer shall not reveal information relating to the representation of a client unless the client gives informed consent, or unless there is an exception to the Rule.

So as you take to these social media platforms, be mindful of the Rules of Professional Conduct as lawyer advertising is deemed commercial speech which the bar can regulate.

[1] Lawyers are using platforms like LinkedIn, Twitter, and Facebook to share information about updates in their law firm.

[3] Virginia State Bar Rule of Professional Conduct 7.1(b) states, “[a] communication violates this rule if it advertises specific or cumulative case results, without a disclaimer that (i) puts the case results in a context that is not misleading; (ii) states that case results depend upon a variety of factors unique to each case; and (iii) further states that case results do not guarantee or predict a similar result in any future case undertaken by the lawyer. The disclaimer shall precede the communication of the case results. When the communication is in writing, the disclaimer shall be in bold type face and uppercase letters in a font size that is at least as large as the largest text used to advertise the specific or cumulative case results and in the same color and against the same colored background as the text used to advertise the specific or cumulative case results.”

[4] In these criminal matters, Hunter’s clients were either: 1) found not guilty, 2) had their charges reduced or dismissed, or 3) entered into a plea bargain to an agreed upon disposition.

[6] Confidentiality of Information. Rule 1.6(a) states, “[a] lawyer shall not reveal information protected by the attorney-client privilege under applicable law or other information gained in the professional relationship that the client has requested be held inviolate or the disclosure of which would be embarrassing or would be likely to be detrimental to the client unless the client consents after consultation, except for disclosures that are impliedly authorized in order to carry out the representation, and except as stated in paragraphs (b) and (c).”

[7] In her majority opinion, Justice Cleo E. Powell reasoned that Hunter’s posts all dealt with public information about his cases that had concluded.

[8] Rule 7.1(a) states, “[a] lawyer shall not make a false or misleading communication about the lawyer or the lawyer’s services. A communication is false or misleading if it:
(1) Contains a material misrepresentation of fact or law, or omits a fact necessary to make the statement considered as a whole not materially misleading; or
(2) is likely to create an unjustified expectation about the results the lawyer can achieve….”

[9] Rule 7.5 Firm Names and Letterheads states, “(a) A lawyer shall not use a firm name, letterhead, or other professional designation that violates Rule 7.1. A trade name may be used by a lawyer in private practice if it does not imply a connection with a government agency or with a public or charitable legal services organization and is not otherwise in violation of Rule 7.1.
(b) A law firm with offices in more than one jurisdiction may use the same name or other professional designation in each jurisdiction, but identification of the lawyers in an office of the firm shall indicate the jurisdictional limitations on those not licensed to practice in the jurisdiction where the office is located.
(c) The name of a lawyer holding a public office shall not be used in the name of a law firm, or in communications on its behalf, during any substantial period in which the lawyer is not actively and regularly practicing with the firm.
(d) Lawyers may state or imply that they practice in a partnership or other organization only when that is the fact.”

[10] Rule 1.6(a) states, “[a] lawyer shall not reveal information relating to representation of a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation, or the disclosure is permitted by paragraph (b).”

]]>https://ylsgavel.wordpress.com/2014/03/12/is-attorney-blogging-a-first-amendment-issue/feed/0ylsgavelThe 2013 Disciplinary Year in Reviewhttps://ylsgavel.wordpress.com/2013/12/24/the-2013-disciplinary-year-in-review/
https://ylsgavel.wordpress.com/2013/12/24/the-2013-disciplinary-year-in-review/#commentsTue, 24 Dec 2013 14:35:38 +0000http://ylsgavel.wordpress.com/?p=225]]>In the December 6, 2013 edition of The Daily Record, Kristi Tousignant summarizes the disciplinary rulings from the Maryland Court of Appeals (COA) in 2013. Tousignant notes that the COA disbarred 37 attorneys in fiscal year 2013[1] with a total of 86 sanctioned attorneys. Although this represents a decline from the prior fiscal year, the raw number of disbarments is still concerning. So, in this installment of The Gavel we will reiterate some helpful tips on how to avoid common practice errors that often lead to client complaints and ultimately lead to sanctions by the Court.

1. Communication

As I discussed in the blog post from October of 2011, one of the most common issues filed against attorneys involve poor communication. Although the Maryland Lawyers’ Rules of Professional Conduct does not specifically define what good communication is, attorneys should review the language of Rule 1.4[2] and adopt and implement office policies and procedures that are communicated to the client early in the representation so that clients are aware of them. At the outset of any new attorney-client relationship, attorneys should make every effort to manage client expectations. Specifically, as a good practice, attorneys should let clients know that telephone calls and e-mail communications are returned within a certain time period (e.g., a 24 hour period, or 1-2 business days).

Another good office practice that some attorneys implement is to send copy clients on all pleadings and correspondence received from or sent by any third party. This not only keeps the client informed of the status of their matter, but also, allows them to be involved with every stage of the representation.

2. Competence/Diligence

As reported by Tousignant in the same Daily Record article, approximately 73% (27 out of 37) of the disbarments in fiscal year 2013 were due to the failure of those attorneys to competently and diligently represent their clients. Attorneys, especially young lawyers, can find themselves overwhelmed with managing their practice and personal lives. To avoid these kinds of ethical complaints, attorneys should consider the following:

1) Declining cases when an attorney does not have the resources or knowledge to handle a client matter. Although an attorney may be interested in a new practice area or need the business, “dabbling” can often lead to a mishandled case. Dabbling is where an attorney accepts a legal matter outside of their practice area and level of expertise. So for instance, a dabbler may take on a representation as a favor to a family member or friend in a personal injury matter, and while they may know the statute of limitations for personal injury cases, they may not be aware of other pertinent law such as notice requirements that would need to be given to governmental entities or the time period for such a requirement. Instead of dabbling, an attorney should consider associating with a more experienced attorney (with the client’s consent, of course) or seek out a mentor who is willing to guide them through the matter.

2) Take advantage of Continuing Legal Education (CLE) offerings. There is no substitute for staying current on changes in the law that affect one’s practice areas. Although not yet required in Maryland, CLE courses can help attorneys increase their knowledge base, improved their practice management, and better serve their clients.

3) Lawyers should be diligent with client screening policies. As I wrote in the September 2011 blog post, an attorney may want to decline representation of the following clients:

Client who is changing lawyers;

Client who has had several previous lawyers on the same matter;

Client whose expectations exceed the evaluation of the case;

Client who has unreasonable motives or a hidden agenda;

Client who has performed considerable amount of research on the case;

Client who refuses to pay the required consultation fee or retainer;

Client who you cannot empathize with; and

Client who makes you feel uncomfortable.

3. Trust Account Management

A sure fire way to be subject to discipline is to mishandle client funds. The only available sanction for intentional and reckless misappropriation, or the unauthorized use of entrusted funds, is disbarment. The sanction available for commingling an attorney’s funds with client funds is a suspension. Complaints, however, can be easily avoided with a few diligent practice policies:

First, an attorney should make sure that they use written fee agreements. Although Rule 1.5(b)[3] does not make a written fee agreement mandatory, it is a wise practice. An attorney’s agreement should, at a minimum, detail what services will be provided, the fee for those services, and how the attorney expects to be paid for those services. If an attorney is receiving client funds in advance (a retainer) those funds must be deposited into an escrow account unless the attorney has received the client’s informed consent that the client is willing to waive entrustment of those funds. See Rule 1.15 (Safekeeping Property).[4] Having these details spelled out in a written agreement with the client will help to establish client expectations about the nature of the representation and how payments will be applied.

Once an attorney has an executed fee agreement with the client and has accepted the client’s first payment, the attorney should maintain the status of their account with some type of accounting or practice management software. This will allow the attorney to properly monitor the work performed for the client, all client payments, and all disbursements made from their account. Additionally, the software will provide the reporting necessary for the client statements and in a worst case scenario, requests from the office of bar counsel.

An additional requirement of the rules often overlooked by attorneys is the process of reconciling the escrow account on a monthly basis. When done properly, this process will alert an attorney to any irregularities with regard to the escrow/trust account that may initiate a bar counsel investigation.

Hopefully following these tips will assist you in maintaining an ethical practice and keep you from becoming subject to a bar counsel complaint.

(1) promptly inform the client of any decision or circumstance with respect to which the client’s informed consent, as defined in Rule 1.0(f), is required by these Rules; (2) keep the client reasonably informed about the status of the matter; (3) promptly comply with reasonable requests for information; and (4) consult with the client about any relevant limitation on the lawyer’s conduct when the lawyer knows that the client expects assistance not permitted by the Maryland Lawyers’ Rules of Professional Conduct or other law. (b) A lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.”

[3] Rule 1.5(b) states, “[t]he scope of the representation and the basis or rate of the fee and expenses for which the client will be responsible shall be communicated to the client, preferably in writing, before or within a reasonable time after commencing the representation, except when the lawyer will charge a regularly represented client on the same basis or rate. Any changes in the basis or rate of the fee or expenses shall also be communicated to the client.”

[4] Rule 1.15(c) states, “[u]nless the client gives informed consent, confirmed in writing, to a different arrangement, a lawyer shall deposit legal fees and expenses that have been paid in advance into a client trust account and may withdraw those funds for the lawyer’s own benefit only as fees are earned or expenses incurred.”

]]>https://ylsgavel.wordpress.com/2013/12/24/the-2013-disciplinary-year-in-review/feed/0ylsgavelPreparing for a Disaster and A Lawyer's Ethical Obligationshttps://ylsgavel.wordpress.com/2013/10/02/preparing-for-a-disaster-and-your-ethical-obligation/
https://ylsgavel.wordpress.com/2013/10/02/preparing-for-a-disaster-and-your-ethical-obligation/#commentsWed, 02 Oct 2013 19:26:43 +0000http://ylsgavel.wordpress.com/?p=206]]>With the unpredictable weather patterns that have plagued our country earlier this year, as lawyers, we may think that the only thing that these weather systems (i.e. tornados, hurricanes, wild and flash flooding to name a few) may affect is our personal property or our vacation plans. While storms like hurricanes are considered unusual for Maryland, we know that in recent history the rash of devastation and destruction caused by major storms, such as Hurricane Sandy and Hurricane Irene, have caused fatalities and millions of dollars in damage.

A natural disaster can shut down a lawyer’s law firm causing loss of revenue and data, prohibit access to critical client files and information, prevent access to the court system, and even cause unintentional disclosures [1] which would result in an attorney running afoul of the ethical Rules of Professional Conduct. In order to mitigate the risks caused by such disasters, it is prudent for a lawyer to have a disaster recovery and business continuity plan.

Many law firms do not have such a plan prepared and, unfortunately, begin to think about developing one once disaster strikes, which is oftentimes, too late. Critical aspects to a good disaster recovery and business continuity plan include taking several key steps:

Analyze your data. Take a minute to analyze your office’s communication systems. Determine what type of data your firm stores, the data’s format, and know where this data is stored. The most important data, of course, are the client files. Many lawyers keep hard copies of files stored in file cabinets, which reduces the risk of damage during some emergency systems. However, especially in cases of flooding, it is always a good idea to have an electronic copy of this data scanned into the firm’s system. This data may later be transmitted through several forms of electronic devices as well so it is advisable to find out from staff members where they either store or review the firm’s data.

Backup your data. It is critical to the survival of your practice to back up your data. It is wise to also have an electronic database of client files either kept off-site or accessible through the cloud so that in the event of disaster, a firm can maintain client information, quickly contact the client, and establish business continuity at another location if it becomes necessary. [2]

Test your Plan. No need to wait for disaster to strike to evaluate how effective your recovery plan is. If there are any vulnerable areas in your plan, make the necessary updates. During your testing period, it will be important to get input from all of your employees to identify if there are any problems or breaches with the recovery plan. [3]

Evaluate. Review the overall effectiveness of your plan. As technology is constantly changing, a continuous evaluation of your plan will require you to remain vigilant and perhaps use new software or tools which will require you to remain competent in that area. [4]

It is better to be prepared and never have the need for your disaster recovery plan then to face a natural disaster and have to start from square one.

A lawyer shall not reveal information relating to representation of a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation, or the disclosure is permitted by paragraph (b).

A lawyer may reveal information relating to the representation of a client to the extent the lawyer reasonably believes necessary:

to prevent reasonably certain death or substantial bodily harm;

to prevent the client from committing a crime or fraud that is reasonably certain to result in substantial injury to the financial interests or property of another and in furtherance of which the client has used or is using the lawyer’s services;

to prevent, mitigate, or rectify substantial injury to the financial interests or property of another that is reasonably certain to result or has resulted from the client’s commission of a crime or fraud in furtherance of which the client has used the lawyer’s services;

to secure legal advice about the lawyer’s compliance with these Rules, a court order or other law;

to establish a claim or defense on behalf of the lawyer in a controversy between the lawyer and the client, to establish a defense to a criminal charge, civil claim, or disciplinary complaint against the lawyer based upon conduct in which the client was involved or to respond to allegations in any proceeding concerning the lawyer’s representation of the client; or

to comply with these Rules, a court order or other law.

[2] While backing up data, lawyers need to be mindful of their ethical obligation under MLRPC 1.6 to ensure that client matters are kept confidential. It is always advisable to review the firm’s general policies and procedures to ensure that client confidentiality is not compromised– especially if data is stored in or passes through devices such as smartphones, portable computers, tablets, I-pads, servers, or in the cloud.

[3] Communication is the most important element of disaster planning. Communication with your employees, clients, vendors, courts, and opposing counsel is key to a successful disaster recovery plan.

[4] In 2012, the American Bar Association amended the Model Rules of Professional Conduct Rule 1.1 (Competence) and added a new provision to Comment [8] which now advises attorneys, “[t]o maintain the requisite knowledge and skill, a lawyer should keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology, engage in continuing study and education and comply with all continuing legal education requirements to which the lawyer is subject.”

]]>https://ylsgavel.wordpress.com/2013/10/02/preparing-for-a-disaster-and-your-ethical-obligation/feed/0ddorsainvilStorm WarningEthics & Social Mediahttps://ylsgavel.wordpress.com/2013/04/01/ethics-social-media/
https://ylsgavel.wordpress.com/2013/04/01/ethics-social-media/#commentsMon, 01 Apr 2013 13:28:00 +0000http://ylsgavel.wordpress.com/?p=195]]>The legal profession is usually the last profession to adapt to new models with regard to business development. However, with the advent of the internet and the far-reaching effects of various social media platforms, more and more lawyers are finding innovative avenues to use these platforms in their business models.

Social media is a great marketing tool that has many benefits. What’s not to love? It is an inexpensive way to provide exposure, to give lawyers name recognition, and most importantly, it generates clients. For example, lawyers are creating attorney blogs to share relevant information about their practice and recent developments in the law. Lawyers are also using platforms like LinkedIn, Twitter, and Facebook to share information about updates in their law firm. These updates include firm announcements, speaking engagements, sponsorships, successes, or any upcoming legal or community service events. Social media can provide another form of easy access for a lawyer to communicate with other lawyers in similar professional circles, with clients, as well as with friends and family. Additionally, social media is also an easy way to perform basic due diligence and legal research when a lawyer desires additional information about an opposing party, a potential witness, opposing counsel, or any other third parties.

Lawyers however, must be mindful of the pitfalls associated with social media that could result in the violation of the ethical Rules. An attorney, when making a post to a social media platform may expose confidential or proprietary information. This is especially common when a lawyer posts information about a recent success in a matter such as a favorable verdict, or when a lawyer shares an anecdote about their challenges either in court, with opposing counsel, or with a difficult client. These type of posts are unauthorized disclosures and violate a lawyer’s duty to keep a client’s matter confidential as stated in Rule 1.6 which states that a lawyer shall not reveal information relating to the representation of a client unless the client gives informed consent, or unless there is an exception to the Rule.

Lawyers also must adhere to their jurisdiction’s ethical Rules that deal with lawyer advertising. Lawyers must only make truthful statements that are not misleading in their advertisements and these statements cannot create an unjustified expectation about the results that the lawyer can achieve for a prospective client. See Rule 7.1. For example, a statement such as “I’ve won every jury trial I’ve ever had” may be technically true but in order for a prospective client to appreciate a lawyer’s skill-set it would be important to know that the lawyer has only had 3 jury trials. Similarly, it is a violation of the Rules to create a Facebook page where you state your firm name, i.e. “Smith & Associates” if in fact you are a solo practitioner and do not have any associates within your firm. Lastly, a lawyer should be aware that although social media makes transmission of information effortless and easier, lawyers are still prohibited from soliciting prospective clients through real-time electronic contact. See Rule 7.2.

In conclusion, social media is clearly more than just a fad. However, lawyers must exercise careful judgment when using these tools and should be aware of the issues that may arise from its use. With that said, a careful review of the ethical Rules is critical to a lawyer’s understanding of how to effectively and properly use social media platforms.

]]>https://ylsgavel.wordpress.com/2013/04/01/ethics-social-media/feed/0ddorsainvilBusinesswomanUpdate on the ABA's Ethics 20/20 Commissionhttps://ylsgavel.wordpress.com/2013/02/28/update-on-the-abas-ethics-2020-commission/
https://ylsgavel.wordpress.com/2013/02/28/update-on-the-abas-ethics-2020-commission/#commentsThu, 28 Feb 2013 15:36:45 +0000http://ylsgavel.wordpress.com/?p=173]]>The American Bar Association’s Commission on Ethics 20/20, the group commissioned in 2009 by then ABA President Carolyn B. Lamm, to thoroughly review the ABA Model Rules of Professional Conduct and to make necessary recommendations to revise those rules as they apply to the evolution of the legal profession as it relates to advances in technology and the globalization of the practice, has concluded its work and has made significant recommendations for revisions to the Model Rules.

The ABA Commission on Ethics 20/20 met at the ABA 2013 Mid-year meeting in Dallas, Texas in early February and the Commission successfully rallied support for sponsorship for four of its Resolutions (including support from the Young Lawyers Division for the Resolutions involving foreign lawyers). As a result of the support as evidenced by several co-sponsorships, the ABA House of Delegates on February 11, 2013, adopted all four of the Commission’s final Resolutions. Three of those Resolutions involved a highly controversial issue – the limited practice authority for inbound foreign lawyers to practice in the United States. The Resolutions are:

Resolution Revised 107A now amends Rule 5.5(d) of the ABA Model Rules of Professional Conduct (Unauthorized Practice of Law; Multijurisdictional Practice of Law)to permit foreign lawyers to serve as in-house counsel in the U.S., but with the added requirement that foreign lawyers not advise on U.S. law except in consultation with a U.S.-licensed lawyer;

Resolution Revised 107B now amends the ABA Model Rule for Registration of In-House Counselto permit foreign lawyers to serve as in-house counsel in the U.S. but with added requirements ;

Resolution 107C now amends the ABA Model Rule on Pro Hac Vice Admissionto provide judges with guidance about whether to grant limited and temporary practice authority to foreign lawyers to appear in U.S. courts; and

Resolution 107D amends the Comment to ABA Model Rule 8.5 to permit lawyers and clients to agree which conflict of interest rules govern the representation.

Congratulations to the Commission for three years of hard work which resulted in phenomenal changes to the rules which governs our conduct. The Commission, in its earlier Resolutions to the House which are now adopted as of August 2012, recommended several changes as they relate to technology and now has addressed the globalization of the practice which will now allow for lawyers to provide more services to clients whose needs may not be limited to our jurisdictional borders.

How does this effect Maryland? We shall soon see if our court adopts similar provisions in the Maryland Lawyers’ Rule of Professional Conduct.

If you are acting as a fiduciary for your client or third party and if you are in possession of entrusted funds, you should be aware of recent changes to the Dodd-Frank Act which previously provided unlimited deposit insurance coverage protection under Section 343 for noninterest-bearing transaction accounts at all Federal Deposit Insurance Corporation (FDIC)-insured depository institutions from December 31, 2010 through December 31, 2012. Funds deposited into attorney IOLTA (Interest on Lawyer Trust Accounts) accounts after December 31, 2012, will no longer be insured under the Dodd-Frank Deposit Insurance Provision. The federal insurance will now only cover up to $250,000 per client ledger within an attorney’s IOLTA account. There are exceptions that may be explored as attorney IOLTA/escrow accounts may be eligible for pass-through coverage per client up to the $250,000 maximum amount.

The FDIC has posted useful information and answers to frequently asked questions on its website that you may find helpful:

Be mindful of this change as this may implicate your ethical obligations under Maryland Rule of Professional Conduct 1.15 (Safekeeping Property) and may result in severe consequences in the event that a fidicuary breaches his or her duty and fails to keep the entrusted funds intact.

]]>https://ylsgavel.wordpress.com/2013/01/09/notice-of-expiration-of-temporary-unlimited-coverage-for-noninterest-bearing-transaction-accounts-dodd-frank-act/feed/0ddorsainvilDo You Accept Credit and Debit Card Payments from Clients? Important Information For Lawyers Who Dohttps://ylsgavel.wordpress.com/2012/11/30/do-you-accept-credit-and-debit-card-payments-from-clients-important-information-for-lawyers-who-do/
https://ylsgavel.wordpress.com/2012/11/30/do-you-accept-credit-and-debit-card-payments-from-clients-important-information-for-lawyers-who-do/#commentsFri, 30 Nov 2012 20:56:07 +0000http://ylsgavel.wordpress.com/?p=160]]>The Illinois Attorney Registration and Disciplinary Commission (IARDC) reports that the Internal Revenue Service (IRS) has added a new regulation to Section 6050W of the Tax Code that could potentially negatively impact lawyer trust accounts as the recent regulations will take effect on January 1, 2013.

Lawyers with long firm names who may have abbreviated either with their credit card processing company or with documents filed with the IRS should take care to ensure that the firm names are an EXACT match to avoid the 28% withholding penalty that will result. Such a penalty on an attorney’s trust account may cause the balance to fall below the entrusted funds amount which could result in an unintentional misappropriation and any overdraft on an attorney’s trust account would trigger a Bar Counsel inquiry.

Please take note and check with your credit card company today to ensure that your information is accurate.

Dolores Dorsainvil is a Senior Staff Attorney with the Office of Bar Counsel.

]]>https://ylsgavel.wordpress.com/2012/11/30/do-you-accept-credit-and-debit-card-payments-from-clients-important-information-for-lawyers-who-do/feed/0ylsgavelTips on How to Deal with a Bar Counsel Complainthttps://ylsgavel.wordpress.com/2012/10/17/tips-on-how-to-deal-with-a-bar-counsel-complaint/
https://ylsgavel.wordpress.com/2012/10/17/tips-on-how-to-deal-with-a-bar-counsel-complaint/#commentsWed, 17 Oct 2012 15:25:05 +0000http://ylsgavel.wordpress.com/?p=145]]>For many attorneys, coming across an envelope with the return address marked “Attorney Grievance Commission ” undoubtedly brings a sinking feeling. After reading the bar complaint, an attorney’s initial reaction may be one of many: anxiety, incredulousness, fear, or even anger. Some attorneys may even view the correspondence from Bar Counsel’s office as a personal attack on their credibility and professionalism as a lawyer. Whatever the feeling, and however the bar complaint arose,[1] with the hundreds of bar counsel complaints that are lodged every year,[2] attorneys should appreciate and understand not only the serious nature of attorney discipline investigations, but that the process can be managed.

Here are several simple tips that will guide you in responding to an inquiry from Bar Counsel should one ever become subject to a complaint:

1) Think. Before penning an emotional response to Bar Counsel, take the time to think about the legal matter, the history of the case, and the client that filed the complaint. Taking this time will aid an attorney in focusing on the issues involved in the complaint and may give that attorney time to give a response based on the facts rather than emotions. An attorney may even want to take the time to review the file in its entirety to make sure that they are able to recall every detail about the underlying legal matter.

2) Be timely. Request an extension if needed. In its cover letter accompanying the bar complaint, Bar Counsel provides a date by which an attorney is required to respond. If for some reason, an attorney is not able to submit a timely response, that attorney may wish to request an extension of time to respond. Bar Counsel will usually grant an initial reasonable request for an extension. The attorney should confirm such a courtesy with a written correspondence. If a circumstance exists that requires a lengthy response period, because as we all know – life happens, i.e. illnesses, deaths, vacations, business or personal matters, it is prudent for an attorney to explain that in writing to Bar Counsel, and provide corroborating documents explaining the lengthy extension request.

3) Respond. This may seem like an obvious step but there are attorneys that, even when they have not committed misconduct, stick their head in the sand in an effort to avoid dealing with the allegations made in a complaint altogether. The important fact to note is that failing to respond to a lawful inquiry from Bar Counsel is a violation of Rule 8.1 (b).[3] So, even if Bar Counsel is not able to make any findings of a violation of the Maryland Lawyers Rules of Professional Conduct (“the Rules”) in the initial bar complaint, Bar Counsel may pursue and prosecute an attorney for violating Rule 8.1(b). No matter how distasteful the prospect of being subject to a bar complaint is, every attorney has an affirmative duty under the Rules to respond to requests for information from bar counsel authorities.

4) Answer the allegations honestly and concisely. An attorney should provide a comprehensive and fair explanation of the facts and circumstances surrounding the allegations made in the complaint. Providing a full picture or history of the representation will assist Bar Counsel render a disposition; however, an attorney should be judicious. Do not do “lawyer speak.” Providing a thirty (30) page response to a complaint and failing to actually address the allegations of misconduct made in the initial complaint may raise concern.

5) An attorney should provide the documents Bar Counsel requests but should also provide relevant documents as exhibits if they corroborate an attorney’s version of events. For example, supplying Bar Counsel with a copy of a key pleading of an issue that has already been addressed by a tribunal is helpful. Taking this pro-active step saves time in the investigation process.

6) Be diligent and comprehensive. An attorney should take the time to explain relevant areas of law as it relates to the underlying legal matter. It is important for an attorney to not assume that Bar Counsel is familiar with every practice area. Providing Bar Counsel with a copy of the applicable rule or statute that the attorney has relied on in the underlying matter is invaluable and can assist Bar Counsel in determining the validity of the bar counsel complaint.

7) Hire counsel, if necessary. This is a determination that can only be made by an attorney but there are benefits to hiring representation. Respondent’s counsels are usually more familiar with the attorney disciplinary process and can help navigate the system.

8) Resolution. If the attorney can and wishes to resolve the issue with his/her client, they are welcome to while the disciplinary matter continues. Sometimes the issue occurs as a result of a misunderstanding, or sometimes the client wants their client file returned or requests a refund. Bar Counsel will not resolve fee disputes but usually will refer the parties to a voluntary fee dispute committee for further review.

An attorney’s cooperation to a Bar Counsel investigation will contribute to a resolution of the matter in a manner which safeguards the rights of the public and protects attorneys from unfounded complaints.

[1] Bar Counsel has many sources for bar complaints. While the majority of them come from clients, Bar Counsel also receives complaints from the courts, opposing counsel, family members, employees, neighbors, and acquaintances of lawyers. Additionally, it is also common for bar counsel authorities to initiate investigations when Bar Counsel learns information either through the media or through litigation records that would support a finding that an attorney has violated the ethical rules.

[2] The 36th Annual Report of the Attorney Grievance Commission (July 1, 2010 through June 30, 2011) states that that 1,880 bar counsel complaints were filed.

[3] An applicant for admission or reinstatement to the bar, or a lawyer in connection with a bar admission application or in connection with a disciplinary matter, shall not: [f]ail to disclose a fact necessary to correct a misapprehension known by the person to have arisen in the matter, or knowingly fail to respond to a lawful demand for information from an admissions or disciplinary authority, except that this Rule does not require disclosure of information otherwise protected by Rule 1.6.